Chapter 11: Marketing Management NCERT SOLUTION CLASS 12TH BUSINESS STUDIES| EDUGROWN NOTES

Short Answer Type Question:

Q.1 What is marketing? What functions does it play with the process of exchange of goods and services? Explain. 

ANSWER: Marketing is the process by which buyers and sellers interact with one another in order to purchase and sell goods and services. Previously, different approaches to marketing’s definition were taken. It is also sometimes called as a process which occurs  post-production involving the purchase of the final products, and other times as a pre-production process involving the merchandising (designing) of the product. In reality, marketing is said to be a much broader concept. It includes all of the activities involved in the exchange of goods and services between producers and consumers. These are the functions that fall under the purview of marketing. It entails product planning, design, packaging and labeling, standardization, branding, warehousing, transportation, advertising, pricing, and distribution. It also includes activities that are carried out even after the product has been sold, such as maintaining customer relations and gathering feedback. As a result, marketing plays an important role in the exchange of goods as well as services.

Q.2 Distinguish between the product concept and production concept of marketing. 

ANSWER: The difference between two concepts of marketing are mentioned below:

Basis of Difference	Product Concept	Production Concept
Belief	It was believed that consumers preferred superior quality products, and that by increasing the quality of the product, profits could be maximized.	It was believed that consumers preferred readily available and affordable products, and that by increasing production volume, profits could be maximized.
Focus of the business	The emphasis was on improving the product’s quality, adding new features, and so on.	The emphasis was on increasing the quantity of production and lowering the average cost of production.
Odology	The emphasis is on improving the product’s features and quality.	The emphasis is on increasing the business’s production efficiency.

Q.3 Product is a bundle of utilities? Do you agree? Comment. 

ANSWER: When a customer decides to purchase a product, his or her primary focus is on the utility that he or she will receive from using it. A customer seeks various levels of satisfaction from a product. A product’s benefits can be classified into three types: functional benefits, psychological benefits, and social benefits. For example, when a consumer buys a car, it provides him with functional utility as a mode of transportation. In addition, having purchased a car provides him with a psychological benefit in the form of pride and self-esteem. It also comes with a social benefit in the form of peer acceptance. As a result, a product is said to be a bundle of utilities, and a buyer values all such utilities when purchasing a product.

Q.4 What are industrial products? How are they different from consumer products? Explain. 

ANSWER: Industrial products are those that are used as inputs in the manufacture of other goods. These items are not intended for final consumption; rather, they are used as raw materials and inputs by manufacturers in the production of consumer goods. Machines, tools, and so on are examples of industrial products. In contrast, consumer products are those that are used by the ultimate customers for their personal consumption. Consumer goods include items such as toothpaste, edible oil, furniture, and so on. The distinctions between industrial and consumer products are highlighted in the following points.

Basis of Difference	Industrial Products	Consumer Products
Number of customers	There are a limited number of customers. For example, oil seeds (an industrial product) are primarily used by mustard oil producers.	The number of customers has increased. Many people, for example, consume mustard oil (a consumer product).
Channel of distribution	Such products necessitate shorter distribution channels, such as direct selling or a one-level channel.	Such products must travel through significantly longer channels before reaching the final consumer. However, the distribution channel for perishable consumer goods is limited.
Location	Industrial products are concentrated only in areas where the industries that produce them are located.	Consumer goods are easily and conveniently available.
Demand	The demand for industrial products is obtained from consumer goods demand.	Consumer product demand is not derived demand; rather, it serves as the foundation for demand for industrial products.
Role of technical features in decision making	When purchasing these products, technical features play an important role.	Manufacturing of such products does not involve any technical complexities. As a result, technical features play little of a role in purchasing decisions.

Q.5 Distinguish between convenience products and shopping products. 

ANSWER: The difference between convenience products and shopping products is given below:

Basis of differenceDemand	Convenience productsConvenience products are in high demand all the time.	Shopping productsShopping products are in relatively low demand.
Nature of products	Convenience goods fall under the category of essential commodities.	In general, such goods are long-lasting in nature.
Unit of purchase and price	These items are sold in small quantities and at a low unit cost. As a result, these items have a low profit margin.	These items are typically larger in size and have high unit prices. As a result, the pro gin is also high.
Nature of purchase	Such items are purchased on the spur of the moment, without much thought or planning.	Such products are not purchased on the spur of the moment; instead, the consumer takes the time to compare the price, quality, and other features of the product.
Example	Ice cream, medicines, newspapers, and stationery items.	Jewelry, furniture, clothing, and so on.

Q.6 ‘Products is a mixture of tangible and intangible attributes’. Discuss. 

ANSWER: In general, a product is a tangible asset with physical characteristics. For example, we consider a motorcycle or a laptop to be products. However, when it comes to marketing a product, it is important to consider not only the physical or tangible attributes of the product, but also certain intangible attributes. That is, a consumer’s decision to buy a product is influenced not only by its tangible characteristics, but also by certain intangible characteristics. In other words, a consumer buys a product for reasons other than its functional utility, such as brand recognition, reputation, social satisfaction, and so on. When a person buys a laptop, he looks for intangible attributes such as guarantee, brand, and so on, in addition to the physical attributes and functional utility of the model, size, features, and so on. As a result, a product is a combination of tangible as well as intangible attributes.

Q.7 Describe the functions of labelling in the marketing of products. 

ANSWER: Labeling plays an important role in product packaging during the marketing process. Labeling essentially provides information about the product in the form of a tag (in the case of unbranded local products such as rice, wheat, and so on) or graphics (such as a lady applying cream on face for a face cream). Labeling serves several functions, the most important of which are as follows.

i) Contents and Description of Use: The primary function of labeling is to provide information about the product’s use, application, warnings, content, and so on. For example, the contents of a shampoo bottle are written on the bottle, along with warnings such as “keep away from children under the age of 10.” Similarly, a picture of noodles describing its appearance can be found on food products such as Maggie Cuppa Mania. Along with this, the ingredients and method of preparation are specified.

ii) Identification and Distinction: A label makes it easier to identify a product. It assists consumers in differentiating their preferred products from others. In a potato chip product, for example, a man eating potato chips is imprinted for identification. A label also contains useful information such as the manufacturer’s name or address, net weight, maximum retail price, batch number, and so on.

iii) Standardization and Evaluation: A label also aids in the determination of a product’s grade. This allows marketers to categorize the product into different categories based on specific qualities or features. For example, a face-cream brand may be divided into three categories: oily skin, dry skin, and normal skin.

iv) Encourages Production: An appealing label also aids marketers in promoting the product. It aids in attracting new customers to the product. For example, the label for Maggi Noodles reads, “Taste bhi, Health bhi.” In this case, the label is crucial in highlighting the product and promoting its sale.

v) Information Necessary for Law: The label also provides and mentions the information that is required by law to be included. On a packet of tobacco, for example, it says, ‘chewing tobacco is harmful to your health.’

Q.8 Discuss the role of intermediaries in the distribution of consumer non-durable products. 

ANSWER: Intermediaries are crucial in the distribution of consumer nondurables. They facilitate the movement of goods from the point of manufacture to the point of consumption. In the case of nondurables, the intermediaries perform the following functions.

i) Arrangement: An intermediary receives goods from a variety of sources. He then categorizes these items into homogeneous groups based on characteristics such as size, quality, and so on. For example, an electronic goods seller may receive a supply of various electronic goods (TV, washing machine, etc.) and then sort them according to their functions.

ii) Collection: An intermediary keeps a large stock of goods on hand to ensure an easy flow of supply. For example, an electronic goods seller may keep a large stock of each type of electronic item.

iii) Allocation and Packing: This function entails dividing larger stock into smaller units. For example, each electronic item and its spare parts are packed separately.

iv) Creating Variety: An intermediary obtains various goods from various sources and assembles them in a single location. As a result, it keeps a wide range of goods. He obtains the products and then sells them in various combinations as desired by the customers. Most people, for example, prefer a television and a video player together. As a result, the retailer can sell a mix of the two.

v) Promotion of Product: They help the manufacturers with their promotional efforts. Manufacturers, for example, use advertising to promote their product. Intermediaries can help this process by displaying banners and other advertisements. For example, an electronic goods retailer may display banners highlighting the features of various products.

vi) Mediation: Middlemen are responsible for negotiating a deal that will satisfy both the producers and the consumers. They negotiate the price, quality, quantity, and so on for an efficient transfer of ownership that meets the needs of both parties.

vii) Bearing Risk: Intermediaries buy goods from manufacturers and keep them in their possession until the final sale. During the process, they are vulnerable to fluctuations in demand, price, spoilage, and so on. Assume a retailer purchases a large number of air conditioners. However, after a few months, winter arrives, and demand for air conditioners decreases. As a result, the stock remains unsold, and the retailer suffers a loss.

Q.9 Explain the factors determining choice of channels of distribution. 

ANSWER: One of the most important marketing decisions is deciding which channel of distribution to use. The following factors influence channel selection.

(i) Product Category: The channel of distribution chosen is determined by the type of product produced. It is critical to determine whether the product is perishable or non-perishable, whether it is an industrial or consumer product, whether its unit value is high or low, and the product’s degree of complexity. For example, if a product is perishable, short channels should be used rather than long ones. Likewise, if a product has a low unit value, a longer channel is preferred. Similarly, consumer goods are distributed via long channels, whereas industrial goods are distributed via short channels.

ii) The Company’s Characteristics: The two most important characteristics of a company that influence channel selection are its financial strength and the level of control it desires over intermediaries. Shorter channels necessitate more funds than longer channels, but they also provide greater control over the channel’s members (intermediaries). As a result, companies that are financially strong or want to have more control over the distribution channel choose shorter distribution channels.

iii) Factors of Competition: The degree of competition and the channels chosen by other competitors influence the distribution channel selection. Depending on its policies, a company may choose to use the same channel as its competitors or a different channel. For example, if a company’s competitors choose to sell through a retail store, the company may do the same, or it may choose a different channel, such as direct selling.

iv) Environmental Aspects: Environmental factors such as economic constraints and legal policies all play a role in channel of distribution selection. For example, the requirement of complex legal formalities at each stage of distribution encourages companies to choose shorter distribution channels.

v) Market Elements: Other factors influencing channel selection include market size, geographical concentration of buyers, quantity demanded, and so on. Shorter channels, for example, are used when potential buyers are concentrated in a small geographical area. In contrast, if the buyers are spread out over a larger area, longer distribution channels may be used.

Q.10 Explain briefly the components of physical distribution. 

ANSWER: Physical distribution is the movement of goods from the point of manufacture to the point of consumption. The components of physical distribution are as follows.

i) Processing of Order: Order processing consists of several steps, including order placement, transmission of the order by intermediaries to the manufacturer, inventory maintenance as needed, delivery of goods, and so on. Because all of these processes take time, a physical distribution system should be designed to ensure quick and accurate order processing. In summary, order processing speed and accuracy are directly related to customer satisfaction. Fast and accurate order processing leads to higher levels of customer satisfaction.

ii) Transportation of Products: The physical movement of goods from the point where they are manufactured to the point where they are consumed is referred to as product transportation. Transporting goods from the point of production to the point of consumption is required to make them physically available to consumers.

iii) Warehousing: The process of storing manufactured goods prior to the final act of sale is known as warehousing. If we suppose that a company has a lot of warehouses then it indicates that the company will be able to provide goods at various locations more quickly and also on time. However, maintaining warehouses comes with its own set of expenses. As a result, a company must weigh the relative benefits and costs of warehousing and strike a balance between the two as needed.

iv) Maintenance of Inventory: Inventory is kept on hand by the companies to ensure that products are delivered on time. Inventory maintenance, like warehousing, has a positive relationship with customer service. However, inventory maintenance comes at a cost because a large amount of capital remains locked up in the stock until it is sold. As a result, the companies must strike a balance between customer service and cost.

Q.11 Define advertising. What are its main features? Explain. 

ANSWER: Advertising is a marketing technique that is used to promote a product. Companies use advertising to attract customers to their products and persuade them to buy them. Newspapers, magazines, television, and other forms of advertising are common. The following are some of the most important aspects of advertising.

(i) Cost Involved: Advertising is not free. It is a form of paid promotion. The costs of advertising will be borne by the sponsors.

ii) Impersonal Mode: Advertising is a form of impersonal communication. In other words, there is no direct interaction between the customer and the advertiser. As a result, it lacks personality and creates a monologue.

iii) Specific Sponsor: There are always a few individuals or sponsors who take on the responsibility of designing it and bearing the associated costs.

Q.12 Discuss the role of ‘sales promotion’ as an element of promotion mix. 

ANSWER: Sales promotion refers to the incentives provided to buyers in order to persuade them to purchase the product. It included activities such as providing discounts, gifts, and free samples, among others. These activities supplement the company’s other promotional efforts, such as advertising and direct selling. They are increasingly attracting customers and persuading them to buy the product right away. Such activities are especially beneficial during the launch of a new product. They provide a temporary boost to sales. Discounts are given by selling the product at a lower price than the listed price, for example. Quantity gifts are given away as freebies (such as 20 percent extra or buy 2, get 1 free). When a new brand is launched, free samples are distributed in the form of small packets. Companies use such incentives to attract more customers and increase sales.

Long Answer Type Question:

Q.1 Define Marketing. How is it different from selling? Discuss.
ANSWER: Marketing is a total system of business activities designed to plan, price, promote and distribute want, satisfying goods and services to present and potential customers.

Q.2 What is the marketing concept? How does it help in the effective marketing of goods and services?
ANSWER:  Orientation of marketing implies that focus on the satisfaction of customers need, is the key to the success of any organisation in the market. All the decisions in the firm are taken from the point of view of the customers, e.g., What product will be produced, with what features and at what price shall it be sold or where shall it be made available for sale will depend on what do the customer wants.
Marketing concept helps in effective marketing of goods and services by using the following
(i) Identification of market or customer who are chosen as the target of
(ii) Understanding needs and wants of customers in the target market.
(iii) Development of products or services for satisfying needs of the target market.
(iv) Satisfying needs of target market better than the competitors.
(v) Doing all this at a profit.

Q.3 What is marketing mix? What are its main elements? Explain.
ANSWER: Marketing mix refers to the combination of four basic elements known as four P’s — Product, Price, Promotion and Place.
Product Mix
(i)Product mix basically concerns with the features related to a product e.g., range, quality, size, labelling, packaging, branding etc. All products must satisfy consumer needs and expectations. It aims at providing good quality products at fair prices.
(ii)Price Mix
It includes decisions relating to price determination, discounts and allowances credit terms. It covers pricing objectives and pricing policies. Price should cover not only cost of production and selling expenses but also a reasonable profit margin. The price policy adopted by the enterprise should not only be cost based but also demand based and competition based.
(iii) Place Mix
Place mix links the seller and buyer. The choice of channels of distribution and transport are the two major issues here. There are various factors which help in deciding the channel e.g., the time and the place, where the goods have to reach or transportation.
It is the nature of goods, place of destination, cost and availability etc.
(iv) Promotion Mix
It refers to all marketing activities to increase the volume of sales of the product of an enterprise. It consists of means of marketing communication with a view to informing and persuading the prospective buyers to buy a certain product. It includes advertising, personal selling, publicity and sales promotion.

Q.4 How does branding help in creating product differentiation? Does it help in marketing of goods and services? Explain.
ANSWER:  Branding helps a firm in distinguishing its products from that of its competitors. This helps the firm to secure and control the market for its products. If products were sold by generic names, it would be very difficult for the marketers to distinguish their products from its competitors. Thus, most marketers give a name to their product, which helps in identifying and distinguishing their products from their competitors product. This process of giving a name or a sign or a symbol etc to a product is called Branding.

Q.5 What are the factors affecting determination of the price of a product or service? Explain.
ANSWER:  There are number of factors which affect the fixation of the price of a product. Some of the important factors in this regard are discussed as below
(i) Product Cost The cost sets the minimum level or the floor price at which the product may be sold. There are broadly three types of cost—fixed costs, variable costs and semi variable cost. Total cost is the sum of all these three. Generally, all firms try to cover all their costs, atleast in the long Sun. In addition, they aim at earning a margin of profit over and above the costs.
(ii) The Utility and Demand The utility provided by the product and the intensity of demand of the buyer sets the upper limit of price, which a buyer would be prepared to pay. Infact the price must reflect the interest of both the parties to the transaction — the buyer and the seller. The buyer may be ready to pay up to the point, where the utility from the product is atleast equal to the sacrifice made in terms of the price paid. The seller would, however, try to cover the costs. According to the law of demand, consumers generally purchase more units at a low price than at a high price.
(iii) The Extent of Competition in the Market
The price is also affected by the nature and degree of competition. The price will tend to reach the upper limit in case there is less degree of competition while under free competition, the price will tend to be set at the lowest level.
(iv) Government and Legal Regulations
In order to profit the interest of public against unfair practices in the field of price fixing, Government can intervene and regulate the price of commodities. Government can declare a product as essential product and regulate its price.
(v) Pricing Objectives
Pricing objectives are another important factor affecting the fixation of the price of a product or a service. Apart from price maximisation, the pricing objectives of a firm may include.
(a)Obtaining Market Share Leadership If a firm objective is to obtain larger share of the market, it will keep the price of its products at lower level, so that greater number of people are attracted to purchase the products.
(b)Surviving in a Competitive Market If a firm is facing difficulties surviving in the market because of intense competition or introduction of a more efficient substitute by a competitor.
(c) Attaining Product Quality Leadership In this case, normally higher prices are charged to cover high quality and high cost of R & D (Research and Development).
(vi) Marketing Methods used Price Fixation
Price is also affected by other elements of marketing such as distribution system, quality of salesmen employed, quality and amount of advertising, sales promotion efforts, the type of packaging, product differentiation, credit facility and customer service provided.

Q.6 What do you mean by ‘Channels of distribution’? What functions do they play in the distribution of goods and services? Explain.
ANSWER:  People, institutions, merchants and functionaries, who take part in the distribution of goods and services are called ‘Channels of Distribution’. Channels of distribution are set of firms and individuals that take title or assist in transferring title, to particular goods or services as it moves from the producers to the consumers.
Channels of distribution smoothen the flow of goods by creating possession, place and time utilities. They facilitate movement of goods by overcoming various barriers The important function performed by middlemen are
(i) Sorting Middlemen procure supplies of goods from a variety of sources, which is often not of the same quality, nature and size. These goods are sorted into homogeneous groups on the basis of the size or quality.
(ii) Accumulation This function involves accumulation of goods into larger homogeneous stock, which help in maintaining continuous flow of supply.
(iii) Allocation Allocation involves breaking homogeneous stock into smaller, marketable lots to sell them to different types of buyers.
(iv) Assorting Middlemen build assortment of products for resale. There is usually a difference between the product lines made by manufacturers and the assortment or combinations desired by the users. Middlemen produce variety of goods from different sources and delivers them in combinations, desired by customers.
(v) Product Promotion Middlemen also participate in some sales promotion activities, such as demonstration, special display, contests etc. to increase the sale of products.
(vi) Negotiation Channels operate with manufacturers on the one hand and customer on the other. They negotiate the price, quality, guarantee and other related matters with customers, so that transfer of ownership is properly affected.
(vii) Risk Taking In the process of distribution of goods, the merchant middlemen take title of the goods and thereby assume risks on account of price and demand fluctuations, spoilage, destinations etc.

Q.7 Explain the major activities involved in the physical distribution of products.
ANSWER: Physical distribution covers all the activities required to physically move goods from manufacturer to the customers. Important activities involved in the physical distribution include transportation, warehousing, material handling and inventory control.
(i) Order Processing
In a typical buyer-seller relationship order placement is the first step. Products flow from the manufacturers to customers via channel members while orders flow from customers to manufacturers. Therefore, a good speedy and accurate system of order processing becomes a necessity.
(ii) Transportation
Transportation is the means of carrying goods and raw materials from the point of production to the point of sale. It is one of the major element in the physical distribution of goods. It is important because unless the good are physically made available, the sale can not be completed.
(iii) Warehousing
Warehousing refers to the act of storing and assorting products in order to create time utility in them. The basic purpose of warehousing activities is to arrange placement of goods and provide facilities to store them. The need for warehousing arises because there may be difference between the time, a product is produced and the time it is required for consumption. Generally, the efficiency of a firm in serving its customers will depend on, where these warehouses are located and where are these to be delivered.
(iv) Inventory Control
A very important decision in respect of inventory is deciding about the level of inventory. Higher the level of inventory, higher will be the level of service to customers but the cost of carrying the inventory will also be high because lot of capital would be tied up in the stock. The decision regarding level of inventory involves prediction about the demand for the product. A correct estimate of the demand helps to hold inventory and cost level down to a minimum. The major factors determining inventory levels include.
(a) Firm’s policy regarding the level of customer service. Higher the level of service, greater will be the need to keep more inventories.
(b) Degree of accuracy of the sales forecast. In case more accurate estimates are available, the need for keeping very high level of inventory can be minimised.
(c) Responsiveness of the distribution system i.e., ability of the system to transmit inventory needs back to the factory and get products to the market.
(d) Cost of inventory, which includes holding cost, such as cost of warehousing, tied up capital etc and the manufacturing cost

Q.8 ‘Expenditure on advertising is a social waste’ Do you agree? Discuss.
ANSWER:  The opponents of advertising say that the expenditure on advertising is a social waste as it adds to the cost, multiplies the needs of the people and undermines social values. The proponents, however argue that advertising is very useful as it increases the reach, brings the per unit cost of production down and adds to the growth of the economy.
Following are the points of criticism
(i) Adds to Cost
The opponents of advertising argue that advertising unnecessarily adds to the cost of product, which is ultimately passed on to the buyers in the form of high prices. It is line that advertisement of a product cost lots of money but it helps to increase the demand for the product as large number of potential buyers come to know about the availability of the products, its features etc and are persuaded to buy it. This increases the demand and therefore the
– production. As a result, the per unit cost of production comes down as the total cost is divided by larger number of units.
(ii) Undermines Social Values
Advertising undermines social values and promotes materialism. It breeds discontentment among people as they come to know about new products and feel dissatisfied with
their present state of affairs. This criticism is not entirely time. Advertisement in fact helps buyer by informing them about the new products which may be improvement over the existing products.
(iii) Confuses the Buyers
Another criticism against advertisements is that so many products are being advertised which makes similar claims that the buyer gets confused as to which one is true and which are should be relied upon, e.g., there are so many brands of soaps, shampoos, cars, TVs, cell phones etc which are advertised. The supporters of advertisement, however argued that we are all rational human beings who make our decisions for purchase of products on factors, such as price, style, size, etc. Thus the buyers can clear their confusion by analysing the information provided on the advertisements and other sources before taking a decision to purchase a product.
(iv) Encourages Sale of Inferior Product
Advertising does not distinguish between superior and inferior products and persuade people to purchase even the inferiors products. The desired level of quality will depend on the economic states and preferences of the target customers. Advertisements sell products of a given quality and the buyers will buy, if it suits their requirements.
(v) Some Advertisements are in Bad Taste
Another criticism against advertising is that some advertisements are in bad taste. They show something which is not approved by some people. Some advertisement spoil the relationship between employer and employee, husband and wife etc.
From the above discussion, we have learnt that through advertisements are crticised but still they have their own advantages. It is not a social waste, rather it adds value to the social cause by giving a boost to production and generating employment.

Q.9 Distinguish between advertising and personal selling.